Polygon, an Ethereum scaling project, has announced a $250 million merger with Hermez, a zero-knowledge (ZK) cryptography-based scaling project, in the first-ever crypto token merger. Verifying data such as transactions, personal information, or identification using zero-knowledge technology is possible without turning over control of the information.
Polygon Hermez will be the new name for the Indian cryptocurrency firm. Additionally, the Hermez project's technology, live solutions, 26-person team, and HEZ coin will all be merged into the Polygon ecosystem.
“The Polygon treasury will commit a maximum of 250 million Matic tokens, or around $250 million, for this merger, depending on the pricing at the moment the agreement was reached (4 August). After officially announcing ZK-based solutions as our strategic goal moving ahead, this merger is our first large step into the ZK scaling arena," Polygon said in a Medium blog post.
According to Polygon, just a handful actual attempts at combining two networks have been made so far. “This is a historic occasion in the sense that it will be (to our knowledge) the first full-fledged integration of two blockchains.
HEZ token holders will be able to exchange their tokens for Polygon's native token (Matic) via a swapping contract that the firms will release soon.
3.5 Matic:1 HEZ has been chosen as the swap ratio. Furthermore, after a yet-to-be-determined date, the HEZ token will cease to exist.
With a market capitalization of nearly $9.5 billion, Matic is among the top 20 cryptocurrencies. The token was trading roughly 13% higher at $1.51 on Friday night, down 42 percent from its all-time high of $2.62 on May 18th.
On the other hand, the HEZ token commanded a market capitalization of around $55 million and was trading 16% higher at $5.
Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun, three Indian software developers, co-founded Polygon (previously Matic Network) in 2017.
Polygon is the world's first well-structured, simple-to-use Ethereum scaling and infrastructure development platform.
The startup aims to address issues with blockchains such as high gas costs and poor performance while maintaining security.
The demand for layer 2 scaling solutions has recently attracted financial inflows, which has fueled the rise in Matic tokens, Polygon's native cryptocurrency